Steven wants to buy a $500 bicycle. Steven has no money saved, but will be able to deposit $45 into a savings account when he re
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Answer:
$1,109.62
Step-by-step explanation:
Let's first compute the <em>future value FV.</em>
In order to see the rule of formation, let's see the value (in $) for the first few years
<u>End of year 0</u>
1,000
<u>End of year 1(capital + interest + new deposit)</u>
1,000*(1.09)+10
<u>End of year 2 (capital + interest + new deposit)</u>
(1,000*(1.09)+10)*1.09 +10 =
<u>End of year 3 (capital + interest + new deposit)</u>
and we can see that at the end of year 50, the future value is
The sum
is the <em>sum of a geometric sequence </em>with common ratio 1.09 and is equal to
and the future value is then
The <em>present value PV</em> is
rounded to the nearest hundredth.